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Fitch affirms stable outlook for state-owned financiers REC, PFC, IRFC

ANI May 9, 2025 183 views

Fitch Ratings has reaffirmed a stable outlook for REC, PFC, and IRFC, highlighting their importance in India’s infrastructure financing. REC plays a key role in power sector liquidity, while PFC supports reforms and weak distribution companies. IRFC remains vital for railway funding with strong government backing. All three entities have expanded into logistics and infrastructure sectors since 2023.

"Our assessment considers REC’s material market share of 20% in the power-lending sector." – Fitch Ratings"
New Delhi, May 9: Fitch Ratings has affirmed stable outlook for three state-owned infrastructure financing companies -- REC Limited, Power Finance Corporation Ltd, and Indian Railway Finance Corporation Limited.

Key Points

1

Fitch affirms REC’s strategic role in power sector reforms

2

PFC critical to preventing liquidity disruptions in power

3

IRFC retains strong government backing for railway projects

4

All three financiers expand into logistics and infrastructure

For REC Ltd, Fitch said REC is strategically important in implementing power sector reforms to boost India's economic growth and development, while its provision of financing and refinancing to projects ensures liquidity in the power sector value chain, particularly to weak distribution companies.

Fitch believes REC's default would most likely disrupt provision of financing and refinancing for projects in the power sector, and might trigger a political crisis.

"Our assessment also considers the company's material market share of 20 per cent in the power-lending sector," Fitch said about REC.

REC, under the administrative control of Ministry of Power, is responsible for extending financial support to India's power sector and has also expanded its business to the logistics and infrastructure sectors. Its borrowers are primarily from government sectors. REC is the nodal agency for the implementation and operation of power sector government schemes.

Similarly, for PFC, Fitch said the company is strategically important to power sector reforms in India, as it provides financing that is essential to prevent liquidity disruptions to the sector, particularly the weak distribution companies.

PFC is majority owned by the Indian government and provides financing to projects and entities in the power sector. It is the nodal agency for activating and managing government programmes in the power sector. PFC has also expanded into the infrastructure and logistics sectors since 2023.

Further, for IRFC, Fitch said that the government has a very strong incentive to provide extraordinary support to IRFC, if needed.

"The affirmation reflects Fitch's view that IRFC remains an important Indian government-related entity (GRE). We have taken into consideration the company's strategic role in supporting India's railway sector and a robust framework for state support. Hence, Fitch believes that the government has a very strong incentive to provide extraordinary support to IRFC, if needed," Fitch said.

Reader Comments

R
Rahul K.
This is great news for our infrastructure development! REC and PFC play such a crucial role in powering India's growth. Their stable outlook shows global confidence in our financial institutions. More power to them! 💪
P
Priya M.
While the stable outlook is positive, I hope these institutions also focus on improving efficiency in power distribution. Many states still face daily power cuts despite massive investments. The money should translate to better services for common people.
A
Amit S.
IRFC's role in railway modernization is often overlooked. With bullet trains and dedicated freight corridors coming up, their financial stability is crucial. Fitch's affirmation shows we're on the right track! 🚄
S
Sunita R.
Good to see our financial institutions getting global recognition. But I worry about the exposure to weak discoms. The government must fix the root problems in power distribution rather than just providing endless financing.
V
Vikram J.
As someone working in infrastructure sector, I can say REC's expansion into logistics is a game-changer. Their stable outlook means more projects can get funding. This is exactly what India needs for its $5 trillion economy dream!
N
Neha P.
The article mentions these companies could trigger political crisis if they default. This shows how deeply connected our economy and politics are. Hope the stability continues for nation's sake 🙏

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Tags:
Fitch Ratings REC Limited Power Finance Corporation IRFC India power sector infrastructure financing
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